U. of Phoenix under fire on student loans

Millions in aid obtained improperly, U.S. says

May 14, 2000|By NEW YORK TIMES NEWS SERVICE

WASHINGTON -- The University of Phoenix, a leader in providing higher education to adults, has improperly allowed students to obtain millions of dollars in federal loans and grants, the inspector general for the Department of Education has found.

The government's review concluded that students had obtained more than $50.6 million in federal loans and $4 million in Pell Grants in excess of the amounts they were entitled to receive. The financial aid is granted to students to help with tuition and other expenses. The audit recommended that the university pay back the money.

The parent company of the university, the Apollo Group of Phoenix, disputed the auditors' findings in documents released with the report March 31. But a spokeswoman with the Department of Education said the company had agreed to a $6 million settlement at the time of the report.

From October 1995 through September 1997, the university, which is run as a for-profit business, distributed $339 million in federal loans and nearly $9 million in Pell Grants, awards that help low-income families pay for college.

When the report was issued, Todd S. Nelson, president of the Apollo Group, said, "There is no basis either in statute or regulation for this assessment."

Last week, Nelson said that by settling the dispute, the Apollo Group had avoided about $3 million to $4 million it would have cost to appeal the case. "That would be unfair for the students," he said.

Auditors found that the school did not provide its students enough instructional time to qualify for much of the federal loans and grants. The university also included cost-of-living expenses inappropriately for some students, the review found.

The University of Phoenix enrolls more than 74,000 students at sites in 15 states in undergraduate and graduate degree programs and certificate programs. It opened a site in Columbia, Md., last year.